Does Helix qualify for a Federal Tax Credit?

Federal Small Turbine Tax Credit

On February 17, 2009, President Obama signed into law The American Recovery and Reinvestment Act of 2009 (the “Act”).  The Act removes the small wind cost caps on Investment Tax Credits (ITC) from the previous legislation.  Under the Act, taxpayers can now claim a 30% tax credit for the purchase and installation of qualifying small wind electric systems with rated capacities of 100 kilowatts or less.  This credit is available from February 17, 2009 through December 31, 2016

For non-residential customers the Act allows entities eligible consumers to receive a financial grant from the treasury department in lieu of the tax credit.  The system must be placed in service in 2009 or 2010 or placed in service before the credit termination date of January 1, 2013 (provided the construction began in 2009 or 2010).  (Source:  American Wind Energy Association:  Summary of Final Provisions in H.R. 1, the American Recovery and Reinvestment Act (ARRA) of 2009, of Interest to Small Wind Turbine Producers and Consumers).

Please consult your tax advisor for more information.Top

How does Net Metering work?

Q. What is net metering?

A. “Net-metering” is a simplified method of metering the energy consumed and produced at a home or business that has its own renewable energy generator, such as a small wind turbine. Under net metering excess electricity produced by the wind turbine will spin the existing home or business electricity meter backwards, effectively banking the electricity until it is needed by the customer. This provides the customer with full retail value for all the electricity produced. Without net metering the excess production is sold to the utility at a much lower price. Under existing federal law (PURPA, Section 210) utility customers can use the electricity they generate with a wind turbine to supply their own lights and appliances, offsetting electricity they would otherwise have to purchase from the utility at the retail price. But if the customer produces any excess electricity (beyond what is needed to meet the customer’s own needs), the utility purchases that excess electricity at the wholesale or ‘avoided cost’ price, which is much lower than the retail price. The excess energy is metered using an additional meter that must be installed at the customer’s expense. Net metering simplifies this arrangement by allowing the customer to use any excess electricity to offset electricity used at other times during the billing period. In other words, the customer is billed only for the net energy consumed during the billing period.

Q. Why is net metering important?

A. There are three reasons net metering is important. First, because wind energy is an intermittent resource, customers may not be using power as it is being generated, and net metering allows them to receive full value for the electricity they produce without installing expensive battery storage systems. This is important because it directly affects the economics and pay-back period for the investment. Second, net-metering reduces the installation costs for the customer by eliminating the need for a second energy meter. Third, net metering provides a simple, inexpensive, and easily-administered mechanism for encouraging the use of small-scale wind energy systems, which provide important local, national, and global benefits to the environment and the economy.

Q. What are the benefits and costs of net metering?

A. Net metering provides a variety of benefits for both utilities and consumers. Utilities benefit by avoiding the administrative and accounting costs of metering and purchasing the small amounts of excess electricity produced by small-scale wind energy facilities. Consumers benefit by getting greater value for some of the electricity they generate and by being able to interconnect with the utility using their existing meter. The only cost associated with net metering is indirect: the customer is buying less electricity from the utility,
which means the utility is collecting less revenue from the customer. That’s because any excess electricity that would have been sold to the utility at the wholesale or ‘avoided cost’ price is instead being used to offset electricity the customer would have purchased at the retail price. In most cases, the revenue loss is comparable to having the customer reducing electricity use by investing in energy efficiency measures, such as compact fluorescent lighting, efficient heating and cooling equipment, or other highly-efficient appliances.
The bill savings for the customer (and corresponding revenue loss to the utility) will depend on a variety of factors, particularly the difference between the ‘avoided cost’ and retail prices and the amount of excess electricity produced. In general, however, the difference will be between $10-40 a month for a 10 kilowatt residential wind energy system. Moreover, any utility revenue losses associated with net metering are at least partially offset by administrative and accounting savings, which are not included in the above figures. These savings can exceed $25 a month because, absent net metering, utilities have to separately process the accounts of customers with wind turbines and issue the monthly checks. In practice, these checks can be for as little as 5 cents.

Q. Can I really use my existing meter to take advantage of net metering?

A. The standard kilowatt-hour meter used for most residential and small commercial customers accurately registers the flow of electricity in either direction. This means the ‘netting’ process associated with net metering happens automatically — the meter spins forward (in the normal direction) when the customer needs more electricity than is being produced, and spins backward when the customer is producing more electricity than is needed in the home or building. The meter registers the net amount of energy produced or consumed
during the billing period.

Q. What is the current status of net metering?

A. Currently, 28 states require at least some utilities to offer net metering for small wind systems, althoughthe requirements vary from state to state. Most state net metering rules were enacted by state utility regulators, and these rules apply only to utilities whose rates and services are regulated at the state level. In recent years many states have enacted net metering laws legislatively, including California, Connecticut, Massachusetts, Montana, Nevada, New Hampshire, New Jersey, Oregon, Vermont, Virginia, and Washington.
In most of the states with net metering statutes, all utilities are required to offer net metering for small wind systems. To find out whether net metering is available in your location, contact the American Wind Energy Association at the address below, or go to the policy area of the AWEA web site, <www.awea.org/policy> and follow the links regarding net metering.

source: Kathy Belyeu, American Wind Energy Association, (202) 383-2504, kath_belyeu@awea.orgTop

How much does electricity cost?

The cost of electricity depends on where you live, how much you use, and possibly when you use it. There are also fixed charges that you pay every month no matter how much electricity you use. For example, I pay $6/mo. for the privilege of being a customer of the electric company, no matter how much energy I use.

Check your utility bill for the rates in your area. If it's not on your bill then look it up on the utility's website.

The electric company measures how much electricity you use in kilowatt-hours, abbreviated kWh. Your bill might have multiple charges per kWh (e.g., one for the "base rate", another for "fuel") and you have to add them all up to get the total cost per kWh.

Most utility companies charge a higher rate when you use more than a certain amount of energy, and they also charge more during summer months when electric use is higher. As an example, here are the residential electric rates for Austin, Texas (as of 11-03):

First 500 kilowatts	5.8¢ per kilowatt hour (kWh)
Additional kilowatts (May-Oct.)	10¢ per kilowatt hour
Additonal kilowatts (Nov.-Apr.)	8.3¢ per kilowatt hour

These figures include a fuel charge of 2.265¢ per kWh.

The average cost of residential electricity was 9.86¢/kWh in the U.S. in March 2006. The average household used 888 kWh/mo. in 2001 and would pay $87.56 for it based on the March 2006 average rate. (Dept. of Energy)

The cost of electricity varies by region. In 2003 the price ranged from 5.81¢ in Tennessee to 12¢ in California, 14.314¢ in New York, and 16.734¢ in Hawaii. In Summer 2001, electricity was a whopping 20¢/kWh in parts of California.

Source: Michael Bluejay

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What is kilowatt hour?

Watts

The rate of electrical use at any moment is measured in watts. For example:

• A 100-watt light bulb uses 100 watts.
• A typical desktop computer uses 65 watts.
• A central air conditioner uses about 3500 watts.

If your device lists amps instead of watts, then just multiply the amps times the voltage to get the watts. For example:

2.5 amps   x   120 volts   =   300 watts

Watt-hours

To know how much energy you're using you have to consider how long you run your appliances. When you run a 1-watt appliance for an hour, that's a watt-hour. It's abbreviated Wh. For example:

• One 100-watt light bulb on for an hour is 100 watt-hours (100 Wh)
• One 100-watt light bulb on for five hours is 500 Wh
• Five 100-watt light bulbs on for an hour is 500 Wh

Kilowatt-hours

1,000 watt-hours is a kilowatt-hour (kWh). For example.

• One 100-watt light bulb on for an hour, is 0.1 kWh (100/1000)
• One 100-watt light bulb on for ten hours is 1 kWh (1 bulbs x 100W x 10h= 1000Wh = 1 kWh)
• Ten 100-watt light bulbs on for an hour, is 1 kWh (10 bulbs x 100W x 1h= 1000Wh = 1 kWh)
• Ten 50-watt light bulbs on for an hour, is 0.5 kWh
• Ten 100-watt light bulbs on for 1/2 an hour, is 0.5 kWh
• Running a 3500-watt air conditioner for an hour is 3.5 kWh.

 

Take a moment to understand the difference between kilowatts and kilowatt-hours. The former is the rate of power at any instant. The latter is the amount of energy used A light bulb doesn't use 60 watts in an hour, it uses 60 watt-hours in an hour.

The "-hours" part is important. Without it we'd have no idea what period of time we were talking about. If you ever see a reference without the amount of time specified, it's almost certainly per hour.

Source: http://michaelbluejay.com/electricity/cost.htmlTop

What are the economics of Small Wind?

Although small wind systems involve a significant initial investment, they can be competitive with conventional energy sources when you account for a lifetime of reduced or altogether avoided utility costs, especially considering escalating fuel costs.

The cost of buying and installing a small wind energy system typically ranges from about $4,000-7,000 per kilowatt for a grid-connected installation, less than half the cost of a similar solar electric system. The length of the payback period (or, the time it takes to "break even") depends on the system you choose, the wind resource at your site, your power provider’s electricity rates, and financing and incentives available. Small wind owners with strong average wind speeds who can take advantage of rebate programs can usually recoup their investments within fifteen years.

Many states have rebate or tax credit programs in place to encourage small wind and other renewable energy applications. AWEA's state-by-state1 pages provide information specific to buying and installing a small wind turbine in each of several U.S. states, including the availability of net metering2, local or state incentive programs, and utility incentives.

The cost of a wind system has two components: initial installation costs and operating expenses. Installation costs include the purchase price of the complete system (including tower, wiring, utility interconnection equipment, power conditioning unit, monitoring system etc.) plus delivery and permitting costs, installation charges, professional fees and taxes.

A Good Investment for Windy Landowners with High Bills
A 5-kW grid-connected residential-scale system generally costs $20-25,000 to install. The best candidates for these systems are homes and businesses with at least a half acre of property, a Class 3 or better wind resource, and utility bills averaging $150 per month or more. If a net metering arrangement is available from the utility, most of the power generated by a grid-connected system can be valued at the retail rate of electricity, reducing the amount of time it takes for a system to pay for itself.

In California, where net metering and the nation’s highest electric rates are combined with a substantial rebate program and a state tax credit, small wind system owners with strong wind resources can recoup their initial investment in under 5 years, and enjoy essentially free electricity for the remainder of the system's 30-year useful life. Such a wind energy system can be an excellent, low-risk investment. It can provide a return of up to 15-20%, depending on electric usage and the wind resource.

Smaller Systems Can Offset Electricity Costs, Provide Independence
Smaller wind energy systems also can be used to offset electricity costs, or to independently power specific applications such as water pumps or recreational vehicle lights and appliances.

A 2.5 kW turbine, including 20-25 foot tower, utility-tie inverter, utility switch box, hardware and installation components, costs about $15,000 installed. A homeowner can typically save at least 20% off the electric bill with a 2.5 kW turbine, given reasonably strong wind resources.(Savings depend on average annual wind speed, tower height, electrical cost and average electric bill.)

Remote systems may require operating battery storage. Individual batteries cost from $150 to $300 for a heavy-duty, 12 volt, 220 amp-hour, deep-cycle type. Larger capacity batteries, those with higher amp-hour ratings, cost more. A 110-volt, 220 amp-hour battery storage system, which includes a charge controller, costs at least $2,000.

Off-Grid Systems Can Be the Least-Cost Option for Electricity
The cost of extending the utility grid to a new home location can be significant, sometimes as high as $20,000-$30,000 for a distance of only one-quarter of a mile. For the same initial investment, a utility-independent renewable energy system can be installed that will meet the electricity needs of an energy-efficient home. Such a system will typically include a combination of a wind turbine, photovoltaics, batteries, an inverter, and a back-up generator. These systems can be cost-effective on a first-cost basis alone, not to mention the avoidance of monthly utility bills for years to come.

 

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